Sajid Javid – 2016 Statement on the Enterprise Bill

Below is the text of the statement made by Sajid Javid, the Secretary of State for Business, Innovation and Skills, to the House of Commons on 2 February 2016.

I beg to move that the Bill be now read a second time.

On my Christmas reading list was a book by Labour’s policy adviser, Andrew Fisher. I am not going to throw a copy at the hon. Member for Wallasey (Ms Eagle), because I am sure that she already has a copy of her own.

In his book [he says]:

“The sole focus of economic debate today seems to be about what leads to economic growth.”

“Why”, he asks, “are we so obsessed with economic growth?”

In the blurb, the shadow Chancellor called it the best thing he has read in years. On the Government Benches we know why sensible people are obsessed with economic growth: it means more jobs, it means prosperity, it lifts people out of poverty, it pays for our health service and our schools, and it allows us to invest in the future of our nation.

We know that growth is not created by politicians or by civil servants. It is not delivered by Whitehall diktat, or by printing money, or by creating an ever-expanding public sector.

Economic growth comes from one thing and one thing alone.

Successful private businesses.

The role of Government is to create an environment in which businesses can thrive. So, while Labour’s policy chief dreams of handing taxpayers’ money to trade unions so they can buy out companies, this Government are taking action to back British business.

We’ve cut corporation tax and red tape.

We’re devolving the power to cut business rates and have doubled small business rate relief.

We’ve lifted nearly half a million employers out of National Insurance contributions.

We’ve supported more than 30,000 companies with Start-Up Loans.

And we’ve just launched a 5-year programme to help British businesses make the most of export opportunities around the world.

All this work is paying off.

In 2016, Britain is home to more private businesses than at any point in history.

Almost 5 and a half million of them.

Over the past 8 years more than 600,000 people have made the courageous decision to become self-employed, many in highly skilled professions.

But I want to do more.

Because, for my sins, I am obsessed with economic growth…

That’s why I’m proud to have introduced the Bill that’s before the House today.

The Enterprise Bill will strengthen the UK’s position as one of the best places in the world to start and grow a business.

It will cut the red tape that too often strangles growth.

It will support investment in the skills that British businesses need to be competitive now and in the future.

And it will help deliver the economic growth and security that benefits every single one of us in this country.

Deregulation and Sunday trading

Let me turn to deregulation.

According to the British Chambers of Commerce, regulations introduced by the last Labour Government cost British businesses almost £90 billion. No doubt this contributed to Labour’s great recession, destroying thousands and thousands of jobs across the country. That is a staggering burden for any employer, but it is a particular problem for Britain’s millions of small businesses, because when people are running their own company they do not just have one job: they have to be a manager; they have to be an accountant; they are in charge of human resources and procurement; they have to issue and chase invoices, source new suppliers and arrange marketing and advertising.

All that on top of the day job.

There are not enough hours in the day as it is.

And the last thing you need is the government on your back, weighing you down with petty rules and regulations.

One way in which we certainly do help businesses is through further deregulation. That is why in the last Parliament we scrapped £10 billion of Labour’s red tape. We have already committed to scrapping another £10 billion between now and 2020.

But business owners have told us that the actions of regulators are just as important as the content of regulations.

So this Bill will extend the deregulation target to include statutory regulators.

And it will increase transparency, with a new annual reporting requirement for regulators subject to the growth duty and regulators’ code.

It will also extend the hugely successful Primary Authority scheme to give more businesses access to reliable, consistent regulatory advice.

This will save them money, and give them the confidence they need to invest and to grow.

The Enterprise Bill will also end the “Whitehall knows best” approach to the regulation of Sunday trading.

We are a One Nation government and we want to see the benefits of economic growth being felt in every corner of our country.

But no two parts of our great nation are identical.

The needs and wants of a small rural community in the South West may be very different to those of a bustling city in the North East.

And the people living and working in those communities understand them far better than any MP or civil servant sitting in a comfy London office.

So we will introduce amendments in this Bill to allow local authorities to decide whether to extend hours in their areas.

Central government will not be dictating how to use this power.

The decision will be entirely local, reflecting local preferences, shopping habits and economic conditions.

If the people of Bromsgrove or Barking say they want to see longer Sunday opening hours, who are we here in Westminster to stand in their way?

Small Business Commissioner

Any of our friends in the press gallery who have spent time freelancing will be all too aware of the problem of late payment.

I’ve heard of one writer who has said he hasn’t been paid for copy he filed two years ago.

But the most shocking aspect is just how common this is.

In my six years as MP for Bromsgrove I have been contacted by many dozens of local business owners who have been pushed to the brink by one thing…

The failure of larger corporations to pay up on time.

When it comes to late payment my department is leading by example.

We pay more than 95% of invoices within 5 days, and more than 99% within 30 days.

But many organisations are less scrupulous, including some in the public sector.

The average British small business is owed almost £32,000 in overdue invoices.

It’s a huge sum.

For many, it can be the difference between success and failure.

Between keeping going for another year and throwing in the towel.

But it’s not easy for a small business or sole trader to challenge a larger firm.

You might not be happy, but you need the contract.

You can’t afford to bite the hand that feeds.

It’s not right, it’s not fair, and this Bill will do something about it.

We are establishing a Small Business Commissioner with a remit to handle complaints by small businesses about payment-related issues with larger businesses.

The commissioner will also have the resources to give general advice and information to assist small businesses with supply relationships and direct them to mediation services.

It’s not just late payment of invoices that’s a problem.

As we’ve seen all too graphically with the recent flooding, it’s absolutely vital that insurance companies also pay out quickly.

Doing so helps small businesses to help themselves, getting them back on their feet.

Yet this doesn’t always happen.

Unnecessary delays by insurers can spell the end for vulnerable small businesses, hitting employees, suppliers, and the wider community and economy.

So this Bill will create a legal obligation on insurers to pay up within a reasonable timeframe.

Apprenticeships

Insurance can protect many of a business’s assets from floods, theft, or fire.

But at any company, the most precious asset isn’t its bricks and mortar.

It’s not stock in the warehouse.

It’s not even money in the bank.

It’s the skilled, dedicated workforce without which no business can succeed.

Developing and growing our skills base is the key to unlocking increased productivity.

It’s the key to raising living standards, and driving that all-important economic growth.

That’s why the government has committed to 3 million new apprenticeships by 2020.

We’ve also introduced a new apprenticeship levy on the very largest employers to help pay for them.

The Enterprise Bill will build on this success.

It will introduce apprenticeship targets for public sector bodies in England.

It will protect the ‘apprenticeship’ brand.

Unscrupulous providers will not be allowed to offer shoddy training, undermining businesses and letting down apprentices.

And I am proud to say that the Bill will create an Institute for Apprenticeships.

An independent employer-led body, the institute will regulate the quality of apprenticeships, and see that standards are driven by the needs of employers.

As well as quality assurance and approval functions, the institute will also have an advisory role on funding allocations for each apprenticeship standard.

And we will be introducing amendments to give employers genuine control of apprenticeship funding through digital accounts as part of the digital apprenticeship service.

Together, these measures will make it easier than ever for young people to access vocational training.

And, just as importantly, for businesses of all sizes to develop the skilled workforce they need to innovate, to compete and to grow in the years ahead.

Business rates

Of course it’s much easier to achieve that growth if the taxman isn’t hovering over you at every turn.

I’ve already talked about how we’ve slashed corporation tax, ending years of punishing entrepreneurs for their success.

But this isn’t the only tax issue facing Britain’s high streets.

It’s often said that small business owners are ‘working for themselves’.

But because of flaws in the business rates system, entrepreneurs can sometimes feel like they are working for their local authority.

We have started to tackle this by capping business rate rises.

And we know the appeals system also needs reform.

So we are working with ratepayers to develop a modern business-focused approach to local taxation.

This Bill will further reduce the burden on businesses by applying the government’s ‘tell us once’ policy to business rates.

And it will put in place legislation to pave the way for better information-sharing between local government and the Valuation Office.

Pubs

Now, allow me to turn to pubs. I’m sure we all agree that local businesses are the heart of the communities they serve.

And that nowhere is this truer than in the great British pub.

I assume that’s one type of business that Hon and Rt Hon members of all parties will be familiar with.

The Small Business Enterprise and Employment Act, passed in the previous Parliament, required the creation of a Pubs Code.

When enacted, the Pubs Code regulations will make life a little fairer for more than 12,000 tied pub tenants across England and Wales.

We have just completed a consultation on these regulations and will publish the final version in time for the code to be in place from the end of May.

Many responses to the consultation raised an issue concerning the market rent-only option, or the so-called ‘MRO’.

Specifically, they said that the eligibility of a tenant to choose MRO at the point of rent assessment should not be contingent on the rent being increased.

Now, good government is all about listening and responding positively.

Clearly this proposal would have had an effect we did not intend.

So I’m happy to announce that we will be accepting the argument regarding MRO.

Members in the ‘other place’ tabled amendments to the Enterprise Bill on this issue.

Obviously we now accept their intent, and we will be tidying them up during the committee stage.

Government-owned businesses and spending

The Opposition have a renewed enthusiasm for seizing control of the means of production, distribution and exchange. I think it is fair to say that Conservative Members do not share that enthusiasm, but we are committed to delivering the best possible value for money from those assets where the taxpayer retains an interest.

We are committed to delivering the best possible value for money from those assets where the taxpayer retains an interest.

Last May the Chancellor announced plans for a new company, UK Government Investments Limited (UKGI), to better manage taxpayer stakes in businesses across the economy.

This Bill contains a provision on UKGI, ensuring the necessary funding powers are in place so it can carry out its vital work.

That will include overseeing the sale of government assets in a way that will benefit the taxpayer.

And that will include the sale of the Green Investment Bank (GIB).

Established in the last Parliament to address a failure in the market, the GIB has demonstrated to the wider world that investment in green projects makes good business sense.

In fact that bank has proved so successful that it has outgrown the need to be financed by the taxpayer.

Moving the bank into private ownership will give it access to much greater volume of capital, mobilising more investment and getting more green projects financed.

The Enterprise Bill contains provisions that will ensure this move to the private sector can take place effectively and transparently.

This will mean the GIB can continue to go from strength to strength delivering the ambitious green business plan it has.

It is that expertise and that business plan that private investors will be buying into.

As the name suggests, green investment is what the Green Investment Bank does.

It is what has made the bank such a success.

No sensible investor would look to change that.

To address concerns raised in the ‘other place’, GIB will create a special share.

This will ensure that its green mission is guarded by an independent party once the bank is sold.

And the share will be put in place without legislation, to ensure we can move the bank to the private sector.

Mandating this in legislation is entirely unnecessary, and unlikely to work.

Finally, this Bill will bring the public sector into line with private sector best practice on exit payments.

Too many public sector fat-cats are currently handed 6-figure pay-offs when they leave a job, often little more than a reward for failure.

This is an insult to the hardworking taxpayers and business owners who finance them.

The Enterprise Bill will end this practice.

Conclusion

Mr Speaker, when Napoleon called Britain a nation of shopkeepers he meant it as an insult.

I see it as a badge of honour.

I grew up above the family shop.

I saw for myself how hard my parents worked, day and night, 7 days a week, to make their business a success.

It takes a special kind of dedication to build something like that from scratch and keep it going for 30 years or more.

And before becoming an MP I spent two decades at the other end of the business spectrum, working for some of the world’s biggest companies.

So for as long as I can remember I’ve been surrounded by people who have created, they’ve managed and grown successful private businesses.

And when they create businesses they create jobs.

They create prosperity.

They create opportunity.

Businessmen and women are the heroes of Britain’s economic recovery.

And whether they’re running an international corporation from Canary Wharf…

…or running a one-woman start-up from a kitchen table…

…they deserve our respect and they deserve our support.

This Enterprise Bill gives them all that and more, and I commend it to the House.